5 Down Payment Assistance Programs That Can Help You Purchase Homes

A down payment is an initial payment that homebuyers need to make to the lenders when they buy a home on credit. But financing the down payment is often the biggest challenge that homebuyers face. However, nowadays, there are down payment assistance programs. Offered by many local housing authorities, state-sponsored funding, as well as other federal programs, these programs finance the down payment of the qualified buyers.

Before you opt for down payment assistance to purchase homes in Texas, you may want to know about the types of down payment assistance programs that you can opt for. Here are a few one of these -

1. Home grants

Grant programs offer help for homebuyers who are interested in purchasing a home but are not specially designed only for first-time home buyers. Qualified homebuyers meeting the program criteria will have on obligation to pay back granted funds. As mortgage grants are separate from home loans, some may be combined with other programs to offer a better incentive to buy a new home. Check whether you can qualify for home grants.

2. Forgivable loans

Also known as “soft second” mortgage, it is something that is forgiven after the homeowner has certain criteria laid out by the lender, including a period of time the borrower should remain in the property. Once the homeowner has reached the necessary requirements laid out by the lender, the loan is forgiven and the funds do not need to be repaid anymore.

3. Non-forgivable loans

Generally, these loans are silent second loan which requires the home buyer to pay back the funds when they choose to refinance, transfer title, or sell the home. Besides, they can be repaid at a lower percentage rate. These "secondary" mortgages are often used when a borrower needs assistance with the down payment required by the initial mortgage.

4. Repayable DPA programs

These programs provide down payment funds at closing often as a 0% interest second loan. However, some may accrue interest and some can be amortizing loans. These programs typically range from 5-year to 30-year loans with varying repayment terms, which may start immediately or kick in after a predetermined period.

5. Mortgage Credit Certificates (MCC)

This annual federal income tax credit is designed to help first-time homebuyers offset a portion of their mortgage interest on a new mortgage as a way to help qualify for a loan. As a tax credit, not a tax deduction, the MCC assists reduce your annual taxes dollar for dollar. The mortgage credit allowed varies based on the state or local government that issues the certificates but is capped at a maximum of $2,000 per year by the IRS. MCCs can often be used alongside another down payment program.

So, you can understand that arranging the down payment will not be difficult for you when you opt for any of these programs. So, what to wait for? Check the eligibility and apply for a program today!